The allegations from Paul Manafort's estranged son-in-law center on four troubled California real estate investments that total millions of dollars.

Author:
Kevin McCoy and Brad Heath, USA TODAY , TEGNA

Published:
10:21 AM EDT October 4, 2017

As federal authorities investigate former Trump campaign chairman Paul Manafort's controversial ties to Russia, his estranged son-in-law is accusing him of conspiring to mislead a federal bankruptcy court about real estate investments.

Jeffrey Yohai made the allegation on Sept. 28, in a case that centers on four troubled California real estate investments that collectively total millions of dollars. Manafort's daughter, Jessica, filed for divorce from Yohai in March.

Yohai's legal declaration alleged that Manafort and other parties in the cases "have all conspired to mislead this court ... as to their true intentions and motivations."

Yohai has worked in real estate in California and New York, business and court records show. Part of that work has focused on buying upscale homes in the Los Angeles area, renovating them, and then marketing and reselling the properties to luxury buyers. Four of the properties he planned to redevelop now are in the bankruptcy proceedings.

The accusations come as special counsel Robert Mueller continues his investigation into Russia's interference in the 2016 presidential election and possible collusion by Moscow with Trump associates. Manafort has been a central figure in that investigation, which has also focused on some of his work for a pro-Russia political party in Ukraine from 2012 to 2014. Mueller's team is conducting a wide-ranging inquiry into Manafort's businesses and his contacts with Russians during his time as Trump's campaign chairman.

FBI investigators are also examining financial transactions between Manafort and Yohai, The New York Times reported in June. Separately, Politico reported that federal investigators had sought Yohai's cooperation, while CNN reported that he had met with investigators. It is unclear whether Mueller's investigation has included the real estate issues now in bankruptcy court.

The bankruptcy matter and Yohai's allegations are scheduled for discussion in a Wednesday hearing before Judge Catherine Bauer in U.S. Bankruptcy Court for California's central district.

Yohai's filing alleged that Manafort and others had misled him and the court about the funding and ownership of the companies that have proposed to clear up the bankruptcy issues. He questioned whether the rescue plan had sufficient funds to finalize the deal.

Peter Carr, a spokesman for Mueller's team, declined to comment, as did Aaron May, an attorney who represents Yohai on any criminal matters. James Hines, an attorney who represents Yohai in the bankruptcy matter, said his client had no comment on the real estate case at this time.

Manafort spokesman Jason Maloni also declined to comment. However, Matthew Browndorf, the managing partner of the law firm Manafort is using to help with the process of buying the troubled real estate companies, said all details of the rescue plan, including its funding, have been submitted to the court.

Browndorf also disputed Yohai's contention that Manafort and others had told him he would have a 50% ownership stake in the entities involved in the bankruptcy rescue effort. An email included in a filing submitted to the court on Tuesday showed that Manafort would own 100% of those entities, Browndorf said.

"We've gone over and above to tell the court everything that we were doing," said Browndorf. He added: "I don't see a single fact" that would support Yohai's allegations.

The arguments focus on bankruptcy proceedings that feature a thicket of limited liability companies involving Yohai and Manafort. In 2016, Genesis Capital, a large private money lender in California, loaned Yohai $4.4 million. The loans were secured by a Brooklyn, N.Y. townhouse owned by Manafort, court records show.

The loans enabled Yohai to move forward on his redevelopment plans. He is the manager for four limited liability companies, each with a single-family Los Angeles home as its principal asset, bankruptcy court records show.

Apparently unable to resell the properties quickly, Yohai filed corporate bankruptcy petitions in December for the companies. The move stalled foreclosure efforts by Genesis Capital, bankruptcy court records show. An attorney for the lender did not respond to an email seeking comment on Yohai's new allegations.

Attorneys for the companies and Genesis Capital discussed potential settlements earlier this year. In June, the sides reached a tentative agreement on a deal in which a pair of new companies would acquire two of the properties and satisfy all existing liens, including the Genesis Capital loans.

Along with an ownership role with the proposed new buyers, Manafort has a claim totaling as much as $2.7 million as a creditor of the company that currently owns one of the properties, bankruptcy court records show. He agreed to waive his lien if the sale is finalized, the records show.

Yohai's latest court filing argued that he and others owned some of the funds identified as belonging to Manafort in a secured claim filed as part of the bankruptcy petition for one of the properties. As a result, Manafort's claim is "worthless," Yohai alleged.

Wednesday's scheduled court hearing is expected to include discussions to extend the deadline for closing the proposed sale until Nov. 21. The postponement would enable the proposed new buyers to complete due diligence financial checks on the transactions.